Chapter 8: Tariffs

Question 1

Tariff

Answer 1

Tax on importing a good or service into a country.

Question 2

Specific Tariff

Answer 2

Stipulated as money amount per unit of import. Ex. Dollar per ton of steel.

Question 3

Ad Valorem Tariff

Answer 3

percentage of the estimated value of a goods when they reach the importing country.

Question 4

Partial equilibrium

Answer 4

An economic analysis in which the effects are examined only in the markets that are directly affected. Supply and demand curves for the market of interest are typically used in a partial equilibrium analysis.

Question 5

Large Country

Answer 5

A country is large if any change in its trade volume for a product is sufficiently large to affect the price of that product in the rest of the world.

Question 6

Small Country

Answer 6

A country is small if any change in its trade volume for a product is too small to have any effect on the price of that product in the rest of the world.

Question 7

Export Supply

Answer 7

The quantity of a product a country would wish to export at a particular price. The export supply curve is the schedule of export supply at every potential price (usually prices above the country’s autarky price).

Question 8

Import Demand

Answer 8

The quantity of a product a country would wish to import at a particular price. The import demand curve is the schedule of import demand at every potential price (usually prices below the country’s autarky price).

Question 9

Consumer Surplus

Answer 9

The difference between what consumers are willing to pay for a unit of the good and the amount consumers actually do pay for the product.

Question 10

Producer Surplus

Answer 10

The difference between what producers actually receive when selling a product and the amount they would be willing to accept for a unit of the good.

Question 11

Monopsony Power in Trade

Answer 11

Another term to describe a large importing country—that is, a country whose policy actions can affect international prices.